Law No. 28/2007 as amended several times, the latest by Law No. 16/2009 concerning General Provisions and Tax Procedures (UU KUP) regulates one of them regarding the rights and obligations of taxpayers. Obligations of Taxpayers include registering themselves to obtain a Taxpayer Identification Number and being confirmed as a Taxable Entrepreneur as stipulated in Article 2 of the KUP Law.
Obligation to fill Notification Letter correctly, completely and clearly, to sign and submit it to the office of the Directorate General of Taxes or other designated places (Articles 3 and 4 of the UU KUP). Obligation to pay or deposit tax owed to the State treasury (Articles 10 and 12 of the KUP Law). As well as the taxpayer’s obligations in connection with the examination (Article 29 paragraph (3) of the KUP Law).
Taxpayer’s rights are also regulated in the KUP Law. One of the taxpayer’s rights regulated in the KUP Law is the right to file an objection. This is regulated in Article 25 of the KUP Law. Not all types of tax assessments can be submitted Objections. Objections can only be submitted to the Director General of Taxes on the Underpayment Tax Assessment Letter (SKPKB), Additional Underpayment Tax Assessment Letter (SKPKBT), Overpayment Tax Assessment Letter (SKPLB), Zero Tax Assessment Letter (SKPN), tax deduction or collection by third parties based on the provisions of tax legislation.
Article 4 paragraph (1) Regulation of the Minister of Finance Number 9 / PMK.03 / 2013 as amended by Regulation of the Minister of Finance Number 202 / PMK.03 / 2015 stipulates that the filing of objections for the 2008 fiscal year and thereafter must meet the following requirements:
- submitted in writing in the Indonesian language;
- state the amount of tax owed or the amount of tax withheld or collected or the amount of loss according to the calculation of the Taxpayer accompanied by the reasons on which the calculation is based;
- 1 (one) objection filed only for 1 (one) tax assessment letter, for 1 (one) tax deduction, or for 1 (one) tax collection;
- Taxpayers have paid the accrued tax at least the amount that has been approved by the Taxpayer in the final discussion of the results of the examination or the final discussion of the results of verification, before the Objection Letter is submitted;
- submitted within a period of 3 (three) months from the date: the tax assessment letter is sent; or withholding or collecting tax by a third party, unless the Taxpayer can show that the period of time cannot be fulfilled due to circumstances beyond the Taxpayer’s authority;
- The Objection Letter is signed by the Taxpayer, and if the Objection Letter is signed by the non-Taxpayer, the Objection Letter must be accompanied by a special power of attorney as referred to in Article 32 paragraph (3) of the KUP Law; and
- Taxpayers do not submit applications as referred to in Article 36 of the KUP Law.
One of the important requirements in filing an Objection is the reasons on which the calculations are based. Reasons that are true, complete, clear and supported by adequate and valid documentary evidence will determine decision making. Whether the objection will be granted in full, partially granted, or rejected. On the other hand, the absence of reasons, unclear reasons, reasons not in accordance with the dispute, or reasons without supporting evidence, will be rejected because they do not meet formal requirements or rejected through a decree.
To be able to compile strong reasons that will be considered in the Objection filing process, Taxpayers can do a number of things. First, during the tax audit process, taxpayers must comply with inspection procedures. Understanding the rights and obligations at the time of the examination is the key. Including the flow and the inspection process as well as the time period. Attending the invitation to the final discussion is of course very necessary. At the time of the final discussion the Taxpayer has the right to get an explanation from the Examiner or the Tax Examiner Officer what the audit findings are.
Examiner correction is one of the important things that determines the reasons that will be submitted by the Taxpayer when filing an Objection. Often found when the Objection of Taxpayers submit reasons that are not in accordance with the examiner’s correction. This is due to taxpayers not knowing and correctly understanding what is the correction of the examiner and why the correction arises.
Therefore the presence of the Taxpayer during the final discussion is very valuable. Besides the Taxpayer can refute the Examiner’s findings, the Taxpayer can also find out in detail what is the examiner’s correction. Why certain posts were corrected and where the Examiner could find the correction. This will determine the reasons that will be submitted by the Taxpayer when filing an Objection.
The second thing that a Taxpayer can do in order to convey a compelling and convincing reason when filing an objection is to ask for information from the Director General of Taxes. In this case the Tax Service Office, the DGT Regional Office, or the Head Office that conducts tax audits. This taxpayer right is guaranteed by Article 25 paragraph 6 of the KUP Law. “If requested by the Taxpayer for the purpose of filing an objection, the Director General of Taxes is obliged to provide a written statement of matters which are the basis for taxation, calculation of losses, or withholding or collecting taxes.”
Elucidation of Article 25 paragraph (6) of the KUP Law provides fairly firm directions. In order for taxpayers to draw up objections for good reason, taxpayers are given the right to ask for the basis for imposing taxes, calculating losses, or deducting or collecting tax that has been determined. Therefore, the Director General of Taxes is obliged to fulfill the request.
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The third thing in compiling the reasons for strong and convincing objections is to really focus on the examiner’s correction. Observe whether the correction is concerning Business Circulation, Cost of Goods Sold, Costs or Objects for Income Tax or VAT. Therefore we need an understanding of taxpayers about what is corrected by the examiner.
If the taxpayer object to all examiners’ corrections, each type of correction must be clearly stated and the reasons for objection must be given for each type of correction. If the objection is only for part of the correction, then the Taxpayer provides enough reasons for the correction and declares no objection to the other correction. Many taxpayers object to objections with all corrections, but only give reasons for certain corrections or corrections. Of course it is difficult for Objection Reviewers to examine the Objection submitted if the Taxpayer does not mention the reason for Objection. Including mentioning the reasons but the reasons are unclear or vague.
The fourth and often found thing in filing an Objection is the amount of correction and the number of objections that are unclear, unequal and out of sync. Then, how can the Taxpayer know the examiner’s correction including the amount? Taxpayers can see the amount of correction when signing the Minutes of the Final Discussion Results. Even more clear is the correction seen in the Tax Assessment Letter / Tax Bill issued based on the results of the examination. Specifically in the section attached to the Tax Assessment Letter or Tax Collection Letter. The details of the number of corrections and the number of objections raised will greatly assist the Objection Reviewers in examining the Obligations of Taxpayers. Especially if the taxpayer can specify the number of examiners’ corrections submitted by the Objection or those not submitted by the Objection.
The last thing and quite important is the legal basis. This legal basis is in the form of rules which become the reasons for taxpayers to file objections. Many tax disputes only concern the legal basis. Fiscus considers a transaction or acquisition of income is a tax object. While taxpayers consider it is not a tax object or should not be taxed. That is because the legal basis used by the tax authorities is different from that used by taxpayers to decide on a transaction or income including tax object or not.
In some cases the tax authorities and taxpayers use the same legal basis but have different interpretations of an article or provision. Therefore it is important for taxpayers to know the legal basis for examining corrections. So that taxpayers can assess whether the use of the legal basis used in corrections is appropriate.